CASE STUDY #3
PROGRAM FUND AND FINANCING FUND
FOR A LOAN GUARANTEE PROGRAM
Prepared By The
Financial Management Domain
DRAFT: December 17, 2004
This document is one of a series of accounting case studies designed by the Financial
Management Domain to ascertain whether entries required to record transactions are
contained in DoD's Standard General Ledger transaction library. This version of the
case, dated December 17, 2004, supersedes all previous versions. The transaction library
is discussed in a separate document entitled "Concept of Operations for the DoD
Standard General Ledger Transaction Library, based on the U.S. Government Standard
General Ledger," draft version 2.0, which these cases accompany. As a useful cross-
reference, the tables below each transaction in the case studies refer to DoD Transaction
Codes used in the transaction library.
NATURE OF THE CASE
This is an accounting case study for a DoD program and financing fund which makes
loan guarantees, such as for loans through which contractors finance construction and
maintenance of military quarters under the Military Housing Privatization Initiative, or
for foreign governments to finance purchase of weapons system component under the
Foreign Military Sales program. Funding is provided by no-year appropriations and
offsetting collections. The case begins with the first year of operation, continues into a
second year to allow “hanging” transactions from Year 1 to be cleared and for some
additional ones to take place, and concludes with a third year of transactions stemming
from the first two. Entries, in standard general journal form, using United States
Government Standard General Ledger (SGL) accounts, include:
• Anticipation and realization of appropriations and of federal and non-
federal collections, including monies transferred from the program fund to
the financing fund.
• Apportionment, allotment, and commitment of funds.
• Obligations for subsidy (broken into its required components),
administrative expenses, interest to Treasury, and defaults, without
advances.1
• Receipt, accrual, and payment for goods and services, including making
direct loans and paying principal and interest on loans from Treasury.
• Collection of principal and interest on defaulted guaranteed loans and
subsidy from the program to the financing fund.
• An upward subsidy re-estimate, accrued at the end of Year 1, with cash
provided at the beginning of Year 2, and a downward subsidy re-estimate
accrued at the end of Year 2, with cash transferred in Year 3.
• Closing entries.
• Entries to track the status of loan guarantee levels and disbursements made
to borrowers by third-party lenders (contained in the appendix to the case).
1
While it would be possible to have advances for undelivered orders with administrative expenses, subsidy
cannot be advanced to the financing fund, since Treasury would have to pay interest on it, and there is no
legal authority for such interest to be paid.
-2-
The case provides pre- and post-closing trial balances, and indicates relationships that can
be expected among the budgetary and proprietary accounts involved. The following
financial statements are issued, with crosswalks prepared for each:
• Statement of net cost.
• Statement of changes in net position.
• Statement of budgetary resources.
• Statement of financing.
• Balance sheet.
The case is designed primarily for an audience of accountants with knowledge of federal
generally accepted accounting principles relating to budgetary and proprietary accounting
for authority, which does not expire, and of loan guarantee program accounting fund
entities and transactions under the Credit Reform Act of 1990.2 Its purpose is to provide a
benchmark against which to test the transactions and reporting modules of an accounting
system to see if they result in essentially the same journal entries, trial balances, and
financial statements.
Some caveats and additional remarks:
• Transactions are summarized for the year, and generally are illustrated
only once. In practice, of course, they would occur numerous times.
• Operating expenses/program costs (account 6100) and future-funded
expenses (account 6800) are subdivided for purposes of illustration—the
account numbers used with two or more different titles. In an actual
situation, attributes, sub-accounts, subsidiary ledgers, or other means
would be required for the separation. Subsidy is accumulated via the
divisions of both accounts.
• Account titles used with the transactions may contain abbreviated titles or
titles that more clearly identify how the accounts are used. For example,
the financing fund uses account 1310, “accounts receivable,” to accrue
upward re-estimates of subsidy at year-end from the program fund. The
title for 1310 in the transactions involved reads “Subsidy Receivable from
Program Fund.”
• Small numbers are used to facilitate reading and comprehension. All
amounts should be considered material. The numbers are assumed for
illustrative purposes, and are not based on actual present value
computations, as they would be in a real situation.
2
P.L. 101-508.
-3-
• While the case illustrates a number of common transactions, there is no
intent or claim to provide for every possible transaction or variation of
transactions. Some transactions have been intentionally omitted. For
example, the case does not illustrate the acquisition, sale, repair, or rental
of foreclosed property on defaulted loans, since at this writing such
transactions would not be expected to occur in DoD’s ongoing credit
programs, which would seize foreclosed property for several years.
Accordingly, while relationships between and among account balances are
as indicated in the case, the formulas for the relationships could be more
complex if additional transactions were included.
• Unless stated otherwise, the transactions reflect business rules established
such that (1) there must be a commitment before an undelivered order; (2)
there must be an undelivered order before a payable; and (3) there must be
a payable before a disbursement.
The sections of the case which follow include the accounts used and, for each of the three
years:
• Relationships among accounts in the opening trial balances.
• Transactions.
• Pre-closing trial balances.
• Relationships among accounts in the pre-closing trial balances.
• Closing entries.
• Post-closing trial balances.
• Relationships among accounts in the post-closing trial balances.
• Financial statements.
Additional information is provided in footnote disclosures or notes within the body of the
text throughout.
ACCOUNTS USED IN THE CASE
Budgetary and proprietary accounts used in the case are set forth in the tables of this
section. A “P” indicates applicability to the program fund and an “F” to the Financing
Fund for Loan Guarantees. Use of account numbers in the “other” series, or use of
multiple accounts with the same number would require a data element or sub-account to
differentiate them in a computer system.
-4-
BUDGETARY ACCOUNTS USED IN THE CASE
4060 Anticipated Collections from Non-Federal Sources (F)
4070 Anticipated Collections from Federal Sources (F)
4115 Loan Subsidy Appropriation (P)
4117 Loan Administrative Expense Appropriation (P)
4118 Re-Estimated Loan Subsidy Appropriation (P)
4120 Anticipated Appropriations – Indefinite (P)
4201 Total Actual Resources – Collected (P,F)
4221 Unfilled Customer Orders Without Advance (F)
4262 Actual Collections of Loan Principal (F)
4263 Actual Collections of Loan Interest (F)
4271 Actual Collections of Subsidy (F)
4273 [Actual] Interest Collected from Treasury (F)
4450 Unapportioned Authority (P,F)
4510 Apportionments (P,F)
4590 Apportionments Unavailable – Anticipated Resources (P)
4610 Allotments – Realized Resources (P,F)
4700 Commitments (P,F)
4801 Undelivered Orders – Obligations, Unpaid (P,F)
4901 Delivered Orders – Obligations, Unpaid (P,F)
4902 Delivered Orders – Obligations, Paid (P,F)
-5-
PROPRIETARY ACCOUNTS USED IN THE CASE
1010 Fund Balance with Treasury (P,F)
1310 Accounts Receivable (F)
1350 [Defaulted Guaranteed] Loans Receivable (F)3
1399 Allowance for Subsidy [- Defaulted Guaranteed Loan Assets] (F)4
2180 Loan Guarantee Liability (F)
2110 Accounts Payable (P,F)
2170 Subsidy Payable to Financing Fund (P)
2190 Other Accrued Liabilities: Subsidy Payable to Misc. Receipt Fund (F)
2510 Principal Payable to Treasury (F)
3100 Unexpended Appropriations – Cumulative (P)
3101 Unexpended Appropriations – Appropriations Received (P)
3107 Unexpended Appropriations – Appropriations Used (P)
3310 Cumulative Results of Operations (P,F5)
5312 Interest Revenue – Loans Receivable/Uninvested Funds (F)
5730 Financing Sources Transferred Out Without Reimbursement (F)
6100 Operating Expenses/Program Costs – Administrative Expense (P)
6100 Operating Expenses/Program Costs – Subsidy Expense – Defaults (P)
6100 Operating Expenses/Program Costs – Subsidy Re-Estimate Expense –
Now Funded (P)
6790 Other Expenses Not Requiring Budgetary Resources: Interest Expenses –
Factor On Loan Guarantee Liability (F)6
6800 Future-Funded Expenses: Funded Subsidy Re-estimates Previously Unfunded (P/F)
6800 Future-Funded Expenses: Unfunded Subsidy Re-estimates Now Funded (P/F)
6800 Future-Funded Expenses: Subsidy Re-estimates – Cash Flows – Principal (P/F)
6800 Future-Funded Expenses: Subsidy Re-estimates – Cash Flows – Interest (P/F)
6800 Future-Funded Expenses: Subsidy Re-estimates – Interest Rate – Principal (P/F)
6800 Future-Funded Expenses: Subsidy Re-estimates – Interest Rate – Interest (P/F)
Memorandum accounts are listed in the appendix to the case, which illustrates their use.
3
FASAB Standard 2 requires separate reporting of loan assets between those related to defaulted
guaranteed loans and those related to direct loans.
4
See note 3, which applies here.
5
The beginning and post-closing balances of this account must be zero in the financing fund.
6
Some credit program agencies use 6330 Other Interest Expenses for the interest factor on the loan
guarantee liability. However, the factor causes a reconciling item on the statement of financing (there are
no obligations, but there is a net cost of operations for the expense). The USSGL Board created the 6700
series for this particular type of reconciling factor, so the case will use 6790 rather than 6330.
-6-
TRANSACTIONS—YEAR 1
1-1. The program fund requested apportionment of a $35 no-year appropriation for
subsidy and a four-year $10 appropriation for administrative expenses.7 The
particular credit program involved was not categorized by law as an entitlement
program8.
4120 Anticipated Appropriations 35
4117 Administrative Expense Appropriations 10
4450 Unapportioned Authority 45
1010 Fund Balance with Treasury 10
3101 Unexpended Appropriations – Received 10
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A102 A102-001 4120 4450 35
A104 A104-011 4117 4450 1010 3101 10
1-2. The financing fund for the loan guarantee program anticipated receiving a $35
subsidy collection from the program fund and $1 of interest from Treasury on
uninvested balances in the fund. Because no defaults or other transactions requiring
an apportionment were expected, no apportionment was requested.
4070 Anticipated Collections from Federal Sources 36
4450 Unapportioned Authority 36
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A140 A140-003 4070 4450 36
1-3. OMB apportioned all requested amounts for both funds, which resulted in
realizing the subsidy appropriation.
1-3a. Program Fund
4115 Administrative Expense Appropriation 35
4120 Anticipated Appropriations 35
4450 Unapportioned Authority 35
4510 Apportionments 35
7
For simplicity, resources and status of resources accounts will not be broken out between these two
purposes of the appropriations. However, the accounting system would need to separate them to make sure
that obligations for any one purpose did not exceed resources related to the purpose.
8
The significance of this is in how downward subsidy re-estimates are treated; in an entitlement program,
downward re-estimates usually go from the financing fund back to the program fund for re-use; in a
discretionary program, they usually go to a designated misc. receipt fund in Treasury.
-7-
1010 Fund Balance with Treasury 35
3101 Unexpended Appropriations – Received 35
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A116 A116-001 4450 4510 35
A104 A104-007 4115 4120 1010 3101 35
1-3b. Financing Fund for Loan Guarantees
No entries required.9
1-4. The funds allotted the maximum authority allowable.
1-4a. Program Fund
4510 Apportionments 45
4610 Allotments – Realized Resources 45
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A120 A120-001 4510 4610 45
1-4b. Financing Fund for Loan Guarantees
No entries required.10
1-5. The entity made a firm commitment to make a $100 loan guarantee to an
applicant after the applicant satisfied stated criteria. The subsidy rate was 35%, and
the full loan was guaranteed.11
1-5a. Program Fund
4610 Allotments – Realized Resources 35
4700 Commitments 35
4700 Commitments 35
4801 Undelivered Orders Without Advances 35
9
Note that there was no apportionment requested of OMB (see transaction 1-2).
10
This is because there was no apportionment (see transactions 1-2 and 1-3).
11
Even if the guarantee was less than 100%, the subsidy is still required by OMB to be stated as a
percentage of the full amount of the loan.
-8-
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B202 B202-001 4610 4700 35
B204 B204-003 4700 4801 35
1-5b. Financing Fund for Loan Guarantees
4221 Unfilled Customer Orders Without Advances 35
4070 Anticipated Collections from Federal Sources 35
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C101 C101-001 4221 4070 35
1-6. The applicant met the required criteria and received the guaranteed loan for
$100 from a third-party lender. The subsidy rate of 35% was entirely for defaults.12
1-6a. Program Fund
4801 Undelivered Orders Without Advances 35
4901 Delivered Orders – Unpaid 35
4901 Delivered Orders – Paid 35
4902 Delivered Orders – Paid 35
6100 Subsidy Expense – Defaults 35
2110 Accounts Payable 35
2110 Accounts Payable 35
1010 Fund Balance with Treasury 35
3107 Unexpended Appropriations – Used 35
5700 Financing Sources – Appropriations Used 35
12
Loan guarantee subsidies also often contain a percentage for interest supplements the government pays
the third-party lender to “buy down” the interest rate, or a negative amount for fees charged for the
guarantee. This is not shown in the case, because DoD apparently does not have these components in its
guarantee agreements.
-9-
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B302 B302-022 4801 4901 6100 2110 35
B110 B110-001 4901 4902 2110 1010 35
B134 B134-001 3107 5700 35
1-6b. Financing Fund for Loan Guarantees
4271 Actual Collections of Subsidy 35
4221 Unfilled Customer Orders Without Advances 35
1010 Fund Balance with Treasury 35
2180 Loan Guarantee Liability 35
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C103 C103-003 4271 4221 1010 2180 35
1-7. The program fund placed obligations for $9 of administrative expenses, without
advances.
4610 Allotments – Realized Resources 9
4700 Commitments 9
4700 Commitments 9
4801 Undelivered Orders Without Advances 9
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B202 B202-001 4610 4700 9
B204 B204-003 4700 4801 9
1-8. The program fund incurred $7 of administrative expenses that had been
obligated in that amount.
4801 Undelivered Orders Without Advances 7
4901 Delivered Orders – Payable (“Unpaid”) 7
6100 Administrative Expenses 7
2110 Accounts Payable 7
3107 Unexpended Appropriations – Used 7
5700 Financing Sources from Appropriations Used 7
- 10 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B302 B302-022 4801 4901 6100 2110 7
B134 B134-001 3107 5700 7
1-9. The program Fund paid $6 of its payables.
4901 Delivered Orders – Payable 6
4902 Delivered Orders – Paid 6
2110 Accounts Payable 6
1010 Fund Balance with Treasury 6
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B110 B110-001 4901 4902 2110 1010 6
1-10. The financing fund collected $1 interest from Treasury on uninvested cash
balances during the year.13
4273 Actual Interest Collected from Treasury 1
4070 Anticipated Federal Resources 1
1010 Fund Balance with Treasury 1
5312 Interest Revenue – Loans Receivable/Uninvested Funds 1
13
Receivables are not normally accrued for this interest, as the interest is required to be collected at
September 30. Were receivables to be accrued, the accrual and collection entries would be as shown below
(all for $1):
4283 Interest Receivable from Treasury 1340 Interest Receivable
4070 Anticipated Federal Collections - and - 5312 Interest Revenue
4273 Actual Collections of Interest 1010 Fund Balance with Treasury
4283 Interest Receivable from Treasury - and - 1340 Interest Receivable
- 11 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C109 C109-085 4273 4070 1010 5312 1
1-11. The financing fund accrued the interest factor on the loan guarantee liability.
6790 Interest Expense – Loan Guarantee Liability 114
2180 Loan Guarantee Liability 1
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
D516 D516-001 6330 2180 1
1-12. There was an upward re-estimate of subsidy in the amount of $4 ($3 principal
and $1 interest) from changes in cash flows plus $1 ($.75 principal and $.25 interest)
due to interest rate changes.15
1-12a. Program Fund
6800 Subsidy Expense – Upward Re-Estimate – Cash Flows - Prin 3
6800 Subsidy Expense – Upward Re-Estimate – Cash Flows - Int 1
6800 Subsidy Expense – Upward Re-Estimate – Interest Rate – Prin .75
6800 Subsidy Expense – Upward Re-Estimate – Interest Rate – Int .25
2170 Subsidy Payable to Financing Fund 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B324 B324-002 6800 2170 5
1-12b. Financing Fund for Loan Guarantees
1310 Subsidy Receivable from Program Fund 5
2180 Loan Guarantee Liability 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C228 C228-001 1310 2180 5
14
In a loan guarantee financing fund with no defaulted guaranteed loans and interest receivable or
foreclosed property, the interest expense on the loan guarantee liability is the same amount as the interest
revenue received from Treasury.
15
FASAB Standard No. 18 requires that the re-estimate be broken into these two components, as seen in the
journal entry for the program fund. Although not required for CFO-Act statements and notes, the amount of
the interest sub-components of the two main components must be reported to OMB.
- 12 -
PRE-CLOSING TRIAL BALANCES—YEAR 1
Budgetary Program Fund Financing Fund for Loan Guar.
4060 N/A -0-
4070 N/A -0-
4115 $35 N/A
4117 10 N/A
4118 -0- N/A
4120 -0- N/A
4201 -0- -0-
4221 N/A -0-
4262 N/A -0-
4263 N/A -0-
4271 N/A 35
4273 N/A 1
4450 -0- (36)
4510 -0- -0-
4590 -0- -0-
4610 (1) -0-
4700 -0- -0-
4801 (2) -0-
4901 (1) -0-
4902 (41) -0–
Proprietary Program Fund Financing Fund for Loan Guar.
1010 $ 4 $ 36
1310 N/A 5
1399 N/A -0-
2110 (1) N/A
2170 (5) N/A
2180 N/A (41)
3100 -0- N/A
3101 (45) N/A
3107 42 N/A
3310 -0- -0-
5312 -0- (1)
5700 (42) N/A
6100 Adm Exp 7 N/A
6100 Subs-Defaults 35 N/A
6790 N/A 1
6800 Sub Re-Est-Cash Fl16 4 -0-
6800 Sub Re-Est-Int Rate17 1 -0-
16
Re-estimated subsidy expense accounts for upward re-estimates would be used by the program fund.
Those related to downward re-estimates would be used by the financing fund. The trial balance aggregates
the two sub-components for principal and interest, since they do not have to be reported in the CFO Act
financial statements and notes.
- 13 -
RELATIONSHIPS AMONG PRE-
CLOSING ACCOUNT BALANCES—YEAR 1
The following relationships exist between the pre-closing trial balances, in addition to the
general requirement that the sum of debit balances must equal the sum of credit balances:
Program Fund
1. 4201 + 4115 + 4117 – 4902 = 1010 [$-0- + 35 + 10 – 41 = $4]
2. 4901E-B + 4902 = 3107 [($1 – $0) + $41 = $42]
3. 3107 = 5700 [$42 = $42]
4. 5700 = 6100 [($7 + $35) = $42]
Financing Fund
1. 4201 + 4262 + 4263 + 4271 + 4273 – 4902 = 1010 [$0 + $0 + $0 +$35 + $1 – $0 =
$36]
2. 6790 – 5312 = 0 [$1 - $1 = $-0-]
3. 3310 must = $-0- [it does]
CLOSING ENTRIES—YEAR 1
Closing entries are set forth below.
Program Fund Budgetary
PCB-1.1 To change the status of unobligated authority for administrative expenses
to unapportioned authority.18
4610 Allotments – Realized Resources 1
4450 Unapportioned Authority 1
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F210 F210-004 4610 4450 1
PCB-1.2. To consolidate the budgetary cash accounts into total actual resources -
collected.
4902 Delivered Orders – Paid 41
4201 Total Actual Resources – Collected 4
4115 Subsidy Appropriation 35
4117 Administrative Expense Appropriation 10
17
See note 16.
18
Note that there is no unobligated authority for the subsidy. If there were, it would also have been closed
to 4450.
- 14 -
USSGL DoD
Proprietar Budgetary Proprietary Proprietary
Trans Trans
y Debit Credit Debit Credit Amount
Code Code
F214 F214-001 4902 4201 41
F204 F204-037 4201 4115 35
F204 F204-038 4201 4117 10
Program Fund - Proprietary
PCP-1.3 To consolidate accounts relating to unexpended appropriations.
3101 Unexpended Appropriations – Received 45
3100 Unexpended Appropriations – Cumulative 3
3107 Unexpended Appropriations – Used 42
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F233 F233-001 3101 3100 45
F233 F233-009 3100 3107 42
PCP-1.4 To close expense and financing source accounts to cumulative results of
operations.
5700 Financing Sources from Appropriations Used 42
3310 Cumulative Results of Operations 5
6100 Administrative Expense 7
6100 Subsidy Expense - Defaults 35
6800 Subsidy Expense – Re-Estimates – for Cash Flow Changes 4
6800 Subsidy Expense – Re-Estimates – for Interest Rate Changes 1
USSGL DoD
Proprietar Budgetary Proprietary Proprietary
Trans Trans
y Debit Credit Debit Credit Amount
Code Code
F228 F228-045 5700 3310 42
F228 F228-032 3310 6800 5
F228 F228-022 3310 6100 42
- 15 -
Financing Fund Budgetary19
FCP-1.1 To consolidate the budgetary cash accounts into 4201.
4201 Total Actual Resources - Collected 36
4271 Actual Collections of Subsidy 35
4273 Actual Collections of Interest 1
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F204 F204-025 4201 4271 35
F204 F204-026 4201 4273 1
Financing Fund Proprietary
FCP-1.2 To close expense and financing source accounts to cumulative results of
operations.20
5312 Interest Income – Loans Receivable/Invested Funds 1
3310 Cumulative Results Of Operations
6790 Interest Expense – Loan Guarantee Liability 1
3310 Cumulative Results Of Operations
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F228 F228-039 5312 3310 1
F228 F228-031 3310 6790 1
19
Although neither 4060 nor 4070 had a balance, if either did, the balance would be closed into 4450.
20
Note that this leaves cumulative results of operations with a zero balance, which is
required. Financing funds cannot have a net position. Their assets must equal their
liabilities.
- 16 -
POST-CLOSING TRIAL BALANCES—YEAR 1
Budgetary Program Fund Financing Fund for Loan Guar.
4047 N/A $ -0-
4060 N/A -0-
4070 N/A -0-
4115 $ -0- N/A
4117 -0- N/A
4118 -0- N/A
4120 -0- N/A
4201 4 36
4221 N/A -0-
4262 N/A -0-
4263 N/A -0-
4271 N/A -0-
4450 (1) (36)
4510 -0- -0-
4590 -0- -0-
4610 -0- -0-
4700 -0- -0-
4801 (2) -0-
4901 (1) -0-
4902 -0- -0–
Proprietary Program Fund Financing Fund for Loan
1010 $ 4 $ 36
1310 N/A 5
1350 N/A -0-
1399 N/A -0-
2110 (1) N/A
2170 (5) N/A
2180 N/A 41
3100 (3) N/A
3101 -0- N/A
3107 -0- N/A
3310 5 -0-
5312 -0- -0-
5700 -0- N/A
5730 N/A -0-
6100 Adm Exp -0- N/A
6100 Sub-Def -0- N/A
6790 N/A -0-
6800 Sub Re-Est-Cash Fl -0- -0-
6800 Sub Re-Est-Int Rate -0- -0-
- 17 -
RELATIONSHIPS AMONG POST-
CLOSING ACCOUNT BALANCES—YEAR 1
The following relationships exist between the post-closing trial balances, in addition to
the general requirement that the sum of debit balances must equal the sum of credit
balances:
Program Fund
1. 4201 = 1010 [$4 = $4]
Financing Fund
1. 4201 = 1010 [$36 = $36]
2. 3310 must = $-0- [it does]
FINANCIAL STATEMENTS – YEAR 1
The following condensed financial statements are illustrated for Year 1:
• Statement of net cost
• Statement of changes in net position
• Statement of budgetary resources
• Statement of financing
• Balance sheet
Crosswalks from the trial balances are provided with the statements. All are pre-closing
figures unless indicated by a “B” (from the beginning trial balance) or an “E” (from the
post-closing trial balance). A “P” indicates that an account comes from the program fund;
an “F” that it comes from the Financing Fund for Loan Guarantees. Where the same
account number is used, line items would have to be distinguished by sub-accounts,
attributes, or some other means of coding.
- 18 -
DoD Loan Guarantee Program
Statement of Net Cost
For Fiscal Year 1
Expenses21
Basic Subsidy Expense – Defaults $35 [6100P]
Re-estimated Subsidy Expense – Cash Flows 4 [6800P]
Re-estimated Subsidy Expense – Interest Rates 1 [6800P]
Interest Expense – Loan Guarantee Liability 1 [6790F]
Administrative Expenses 7 $48 [6100P]
Earned Revenue:
Interest Revenue – Treasury (1) [5312F]
Net Cost of Operations $47
DoD Loan Guarantee Program
Statement of Changes in Net Position
For Fiscal Year 1
Crosswalk
Cumulative Results of Operations:
Cumulative Results of Operations October 1 $-0- 3310P;B
Appropriations Used for Goods, Services,
And Benefits 42 5700P
Net Cost of Operations (47) From SNC
Cumulative Results of Operations September 30 $(5) Must = 3310P/E
Unexpended Appropriations
Unexpended Appropriations October 1 $-0- 3100P;B
Appropriations Received 45 3101P
Appropriations Used (42) 3107P
Unexpended Appropriations September 30 $ 3 Must = 3100P;E
21
FASAB Standards 2 and 18 require that subsidy expense must be broken into its components. This is
done on the face of the statement of net cost here. An alternative, used by most credit agencies, is be to
combine the subsidy expense into a single amount on the statement of net cost and break it out in a footnote
to the financial statements.
- 19 -
DoD Loan Guarantee Program
Statement of Budgetary Resources
For Fiscal Year 1
[Program Fund] [Financing Fund]
RESOURCES BUDGETARY NON-BUDGETARY Crosswalk
Unobligated Balance Forward October 1 $-0- $-0- 4450B
New Resources:
Appropriations 45 4115/4117
Offsetting Collections 36 4271,4273
TOTAL RESOURCES $45 $36
STATUS OF RESOURCES
Obligated $44 $ -0- 48xx/49xxE-B
Unobligated – Available for New Obligations 1 36 4450
TOTAL STATUS OF RESOURCES $45 $ 36
RELATIONSHIP OF NET OBLIGATIONS
TO NET OUTLAYS
Gross Obligations $44 $ -0- Sec. 2
Less Offsetting Collections -0- (36) Sec. 1
Net Cash and Non-Cash Obligations 44 (36)
Less Undelivered Orders Without Advances (2) (Note A) -0- 4801E-B
NET OUTLAYS $42 $(36)
Components of Net Outlays:
Disbursements $42 $-0- 4902
Offsetting Collections -0- (36) 4271,4273
NET OUTLAYS $42 $(36)
____________
(A) The ending amount of undelivered orders without advances was $2; the beginning amount was $-0-.
DoD Loan Guarantee Program
Statement of Financing
For Fiscal Year 1
Crosswalk
Net Obligations (from statement of budgetary resources) $ 8 SOBR, Sec 3
Items in Net Obligations Not
Funding Net Cost of Operations:
Collections of Subsidy 35 4271P
Increase in Undelivered Orders (2) 33 4801P(E-B)
Net Obligations Funding
Net Cost of Operations 41
Items in Net Cost of Operations Not
Requiring or Using Current-Period Resources:
Upward Subsidy Re-estimate 5 6800P
Interest Expense – Loan Guarantee Liab. 1 6 6790F
Net Cost of Operations $47
- 20 -
DoD Loan Guarantee Program
Balance Sheet
At End of Fiscal Year 122
ASSETS Crosswalk
Fund Balance with Treasury $40 1010P/F
LIABILITIES
Accounts Payable $ 1 2110P
Loan Guarantee Liability 41 $42 2180F
NET POSITION
Unexpended Appropriations 3 3100P;E
Cumulative Results of Operations (5) (2) 3310P;E
TOTAL LIABILITIES AND NET POSITION $40
22
Note that the financing fund’s receivable from the program fund, and the program fund’s payable to the
financing fund are eliminated in the consolidation process and do not appear on the consolidated balance
sheet.
- 21 -
TRANSACTIONS—YEAR 2
The transactions for Year 2 in the program fund are limited to liquidating the obligations
and unobligated liabilities from Year 1. In the financing fund, they are limited to the loan
guarantees made in Year 1. In an actual situation, additional administrative expenses
would also be incurred and additional loan guarantees would also be made.
2-1. The program fund submitted a request for realization of the permanent
indefinite appropriation for the upward re-estimate accrued in transaction 1-13.
The financing fund anticipated collection of it, and of $2 in interest from Treasury.
The financing fund also estimated that $25 of guaranteed loans would default, and
that it would have to pay a default claim in that amount, assuming the loans for
direct collection. It estimated that it would collect $1 of interest and $3 of principal
on the loans.
2-1a. Program Fund
4120 Anticipated Appropriations 5
4450 Unapportioned Authority 5
USSGL DoD
Proprietar Budgetary Proprietary Proprietary
Trans Trans
y Debit Credit Debit Credit Amount
Code Code
A102 A102-001 4120 4450 5
2-1b. Financing Fund for Loan Guarantees
4060 Anticipated Collections from Non-Federal Sources 4
4070 Anticipated Collections from Federal Sources 7
4450 Unapportioned Authority 11
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A140 A140-001 4060 4450 4
A140 A140-003 4070 4450 7
2-2. OMB approved both apportionment requests.
2-2a. Program Fund
4118 Re-estimated Loan Subsidy Appropriation 5
4120 Anticipated Appropriations 5
4450 Unapportioned Authority 5
4510 Apportionments 5
- 22 -
1010 Fund Balance with Treasury 5
3101 Unexpended Appropriations - Received 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A104 A104-013 4118 4120 1010 3101 5
A116 A116-001 4450 4510 5
2-2b. Financing Fund for Loan Guarantees
4450 Unapportioned Authority 25
4510 Apportionments 2523
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A116 A116-001 4450 4510 25
2-3. The agency allotted the apportionments.
2-3a. Program Fund
4510 Apportionments 5
4610 Allotments – Realized Resources 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A120 A120-001 4510 4610 5
2-3b. Financing Fund
4510 Apportionments 25
4610 Allotments – Realized Resources 25
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A120 A120-001 4510 4610 25
23
There was $36 in unobligated authority brought forward, which is more than enough to fund the $25
default payment. The anticipated resources are not expected to be needed. Hence, the entire $25 is credited
to 4510, rather than split between 4510 and 4590.
- 23 -
2-4. The program fund transferred the re-estimated appropriation to the financing
fund.
2-4a. Program Fund
4610 Allotments – Realized Resources 5
4700 Commitments 5
4700 Commitments 5
4801 Undelivered Orders Without Advances 5
4801 Undelivered Orders without Advances 5
4902 Delivered Orders – Paid24 5
2170 Subsidy Payable to Financing Fund 5
1010 Fund Balance with Treasury 5
3107 Unexpended Appropriations – Used 5
5700 Financing Sources – Appropriations Used 5
6100 Funded Subsidy Re-estimate Expense Previously Unfunded 5
6800 Unfunded Subsidy Re-estimate Expense Now Funded 525
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B202 B202-001 4610 4700 5
B204 B204-003 4700 4801 5
B344 B344-011 4801 4901 6100 6800 5
B105 B105-002 4801 4902 2170 1010 5
B134 B134-001 3107 5700 5
24
The business rule of establishing a payable is waived for this transaction, because a non-budgetary
payable was accrued in Year 1. Requiring an entry to account 4901 for the current transaction would
require a companion funded liability, such as 2110, to be recorded along with it to keep the budgetary and
proprietary accounts in synch. This complication is too cumbersome to implement.
25
This entry is designed to equate financing sources from appropriations used with funded expenses. Note
that the $5 was recorded as a credit to two 6800 accounts in transaction 1-12. Combining this with
transaction 2-4, the net result is a funded expense of $5. Note that there would be no expense related to this
reported on the statement of net cost for Year 2, because the debit to 6100 and credit to 6800 cancel.
- 24 -
2-4b. Financing Fund for Loan Guarantees
4271 Actual Collections of Subsidy 5
4070 Anticipated Collections from Federal Sources 5
1010 Fund Balance with Treasury 5
1310 Subsidy Receivable from Program Fund 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C106 C106-002 4271 4070 1010 1310 5
2-5. The program fund incurred additional administrative expenses of $2, related to
the undelivered orders placed in Fiscal Year 1, and recorded them as payable.
4801 Undelivered Orders without Advances 2
4901 Delivered Orders – Payable (Unpaid) 2
6100 Administrative Expenses 2
2110 Accounts Payable 2
3107 Unexpended Appropriations – Used 2
5700 Financing Sources – Appropriations Used 2
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B302 B302-022 4801 4901 6100 2110 2
B134 B134-001 3107 5700 2
2-6. The program fund paid all accounts payable.
4901 Delivered Orders – Payable (Unpaid) 3
4902 Delivered Orders – Paid 3
2110 Accounts Payable 3
1010 Fund Balance with Treasury 3
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B110 B110-001 4901 4902 2110 1010 3
- 25 -
2-7. The financing fund approved a default claim for $25 and paid it, assuming $25
in defaulted guaranteed loans for direct collection with a present value of $10.26
4610 Allotments – Realized Resources 25
4700 Commitments 25
4700 Commitments 25
4801 Undelivered Orders Without Advances 25
4801 Undelivered Orders without Advances 25
4901 Delivered Orders – Unpaid 25
4901 Delivered Orders – Unpaid 25
4902 Delivered Orders – Paid 25
2180 Loan Guarantee Liability 25
2110 Accounts Payable 25
2110 Accounts Payable 25
1010 Fund Balance with Treasury 25
1350 [Defaulted Guaranteed] Loans Receivable 25
1399 Allowance for Subsidy 1527
2180 Loan Guarantee Liability 10
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans Amount
Debit Credit Debit Credit
Code Code
B202 B202-001 4610 4700 25
B204 B204-003 4700 4801 25
B104 B104-005 4801 4901 2180 2110 25
B110 B110-001 4901 4902 2110 1010 25
C220 C220-003 1350 1399 15
C220 C220-004 1350 2180 10
26
Though not illustrated in the case, it would also be possible that interest receivable would be assumed. If
so, the interest receivable could be debited to 1340, or could also be debited to 1350, leaving 1340 only for
additional accruals of interest after the initial receivables were assumed.
27
$25 in gross loans receivable less the $10 present value of the loans.
- 26 -
2-8. The financing fund collected $2 of interest and $1 of principal on the defaulted
guaranteed loans.
4262 Actual Collections of Loan Principal 1
4263 Actual Collections of Loan Interest 2
4060 Anticipated Collections from Non-Federal Sources 3
1010 Fund Balance with Treasury 3
1350 [Defaulted Guaranteed] Loans Receivable 1
1399 Allowance for Subsidy 228
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C109 C109-034 4262 4060 1010 1350 1
C109 C109-041 4263 4060 1010 1399 2
2-9. Treasury interest of $1 on uninvested balances in the financing fund was
received.29
4273 Actual Interest Collected from Treasury 1
4070 Anticipated Federal Resources 1
1010 Fund Balance with Treasury 1
5312 Interest Revenue – Loans Receivable/Uninvested Funds 1
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
C109 C109-085 4273 4070 1010 5312 1
2-10. The interest factor on the loan guarantee liability and present value of the loan
assets (receivables) was recorded in the financing fund. $1 was related to the loan
assets and $2 to the loan guarantee liability.30
1399 Allowance for Subsidy 1
6790 Interest Expense – Loan Guarantee Liability 1
2180 Loan Guarantee Liability 2
28
Note that interest recognized on defaulted guaranteed loans receivable after initial assumption of the
loans for direct collection is credited to 1399 under credit reform accounting.
29
See note 13, which applies here.
30
While this relationship of the factor for the liability to the factor for the loans would be different using
present value computations, it is assumed for simplicity in the case.
- 27 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
D366 D366-001 1399 2180 1
D516 D516-001 6330 2180 1
Note: Account 6330 (Other Interest Expense) could be substituted for 6790 (Interest
Expense).
2-11. A re-estimate determined that the present value of the loan assets in the
financing fund at the balance sheet date was $7; the present value of the loan
guarantee liability was $23. The net downward re-estimate of $431 was recorded to
adjust the present value amounts and accrue the excess subsidy to the misc. receipt
account in Treasury designated for it.
2180 Loan Guarantee Liability 5
6800 Re-estimated Subsidy Expense – Cash Flow 432,33
1399 Allowance for Subsidy [Defaulted Guaranteed Loans] 1
5730 Non-Budgetary Transfers-Out 4
2190 Downward Re-estimate Payable to Misc. Receipt Fund 4
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
D112 D112-007 2180 1399 1
D112 D112-008 2180 6800 4
D112 D112-002 5730 2190 4
31
The present value of the loans receivable just before this transaction was $8 ($24 in 1350 less $16 in
1399). Hence, the re-estimated value of $7 requires an additional $1 of subsidy. The present value of the
loan guarantee liability just before this transaction was $28. The re-estimated value of $23 means that $5
too much of subsidy had been collected. The difference is a net over-collection of subsidy in the amount of
$4 ($5 too much less $1 “not enough”).
32
Note that only differences in cash flow projections would cause the difference in Year 2 and subsequent
years. In year 1, the interest rate would have been adjusted to actual, and there would no longer be a
difference between an estimated and the actual rate of interest.
33
The subsidy expense would need to be broken out into the sub-components of principal and interest for
purposes of reporting to OMB. As this was illustrated for Year 1, and because it is not required for CFO
Act financial statements and notes, it is not repeated in Year 2.
- 28 -
PRE-CLOSING TRIAL BALANCES—YEAR 2
Budgetary Program Fund Financing Fund for Loan Guar.
4060 N/A $ 1
4070 N/A 1
4115 $-0- N/A
4117 -0- N/A
4118 5 N/A
4120 -0- N/A
4201 4 36
4221 N/A -0-
4262 N/A 1
4263 N/A 2
4271 N/A 5
4273 N/A 1
4450 (1) (22)
4510 -0- -0-
4590 -0- -0-
4610 -0- -0-
4700 -0- -0-
4801 -0- -0-
4901 -0- -0-
4902 (8) (25)
Proprietary Program Fund Financing Fund for Loan Guarantees
1010 $1 $ 20
1310 N/A -0-
1350 N/A 24
1399 N/A (17)
2110 -0- N/A
2170 -0- N/A
2180 N/A (23)
2190 N/A (4)
3100 (3) N/A
3101 (5) N/A
3107 7 N/A
3310 5 -0-
5312 -0- (1)
5700 (7) N/A
5730 -0- 4
6100 Adm Exp 2 N/A
6100 Sub-Def -0- N/A
6100 Funded Sub Re-Est 5 -0-
6790 Interest Exp - LGL N/A 1
6800 Sub Re-Est-Cash Fl -0- (4)
6800 Sub Re-Est-Int Rate -0- -0-
6800 Unf Sub Re-Est Funded (5) -0-
- 29 -
RELATIONSHIPS AMONG PRE-
CLOSING ACCOUNT BALANCES—YEAR 2
The following relationships exist between the pre-closing trial balances, in addition to the
general requirement that the sum of debit balances must equal the sum of credit balances:
Program Fund
1. 4201 + 4115 + 4117 + 4118 – 4902 = 1010 [$4 + $0 + $0 + $5 – 8 = $1]
2. 4901E-B + 4902 = 3107 [($0–- $1) + $8 = $7]
3. 3107 = 5700 [$7 = $7]
4. 5700 = 6100 [($5 + $2) = $7]
Financing Fund
1. 4201 + 4262 + 4263 + 4271 + 4273 – 4902 = 1010 [$36 + $1 + $2 +$5 + $1 – $25 =
$20]
2. 6790 – 5312 = 0 [$1 – $1 = $-0-]
4. 3310 must = $-0- [it does]
CLOSING ENTRIES—YEAR 2
Closing entries are set forth below.
Program Fund Budgetary
PCB-2.1 To consolidate the budgetary cash accounts into total actual resources -
collected.
4902 Delivered Orders – Paid 8
4201 Total Actual Resources – Collected 3
4118 Re-estimated Loan Subsidy Appropriation 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F214 F214-001 4902 4201 8
F204 F204-039 4201 4118 5
Program Fund - Proprietary
PCP-2.2 To consolidate accounts relating to unexpended appropriations.
3101 Unexpended Appropriations – Received 5
3100 Unexpended Appropriations – Cumulative 2
3107 Unexpended Appropriations – Used 7
- 30 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F233 F233-009 3100 3107 7
F233 F233-001 3101 3100 5
PCP-2.3 To close expense and financing source accounts to cumulative results of
operations.
5700 Financing Sources from Appropriations Used 7
6800 Subsidy Expense – Unfunded Re-estimates Now Funded 5
3310 Cumulative Results of Operations 5
6100 Administrative Expense 2
6100 Subsidy Expense – Funded Re-estimates Previously Unfunded 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F228 F228-045 5700 3310 7
F228 F228-022 3310 6100 2
F228 F228-022 3310 6100 5
F228 F228-062 6800 3310 5
Financing Fund Budgetary
FCP-2.1. To close anticipated resources
4450 Unapportioned Authority 2
4060 Anticipated Non-Federal Resources 1
4070 Anticipated Federal Resources 1
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F112 F112-023 4450 4060 1
F112 F112-024 4450 4070 1
FCP-2.2 To consolidate the budgetary cash accounts into 4201.
4902 Delivered Orders – Paid 25
4201 Total Actual Resources - Collected 16
4262 Actual Collections of Loan Principal 1
4263 Actual Collections of Loan Interest 2
4271 Actual Collections of Subsidy 5
4273 Actual Collections of Interest 1
- 31 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F204 F204-019 4201 4262 1
F204 F204-020 4201 4263 2
F204 F204-025 4201 4271 5
F204 F204-026 4201 4273 1
F214 F214-001 4902 4201 25
Financing Fund Proprietary
FCP-2.3 To close expense and financing source accounts to cumulative results of
operations.34
6800 Re-Estimated Subsidy Expense – Cash Flows 4
5312 Interest Income – Loans Receivable/Invested Funds 1
3310 Cumulative Results Of Operations 5
6790 Interest Expense – Loan Guarantee Liability 1
5730 Non-Budgetary Transfers-Out 4
3310 Cumulative Results Of Operations 5
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F228 F228-062 6800 3310 4
F228 F228-039 5312 3310 1
F228 F228-031 3310 6790 1
F228 F228-011 3310 5730 4
34
Note that this leaves cumulative results of operations with a zero balance, which is
required. Financing funds cannot have a net position. Their assets must equal their
liabilities.
- 32 -
POST-CLOSING TRIAL BALANCES—YEAR 2
Budgetary Program Fund Financing Fund for Loan Guar.
4060 N/A $-0-
4070 N/A -0-
4115 $-0- N/A
4117 -0- N/A
4118 -0- N/A
4120 -0- N/A
4201 1 20
4221 N/A -0-
4262 N/A -0-
4263 N/A -0-
4271 N/A -0-
4273 N/A -0-
4450 (1) (20)
4510 -0- -0-
4590 -0- -0-
4610 -0- -0-
4700 -0- -0-
4801 -0- -0-
4901 -0- -0-
4902 -0- -0-
Proprietary Program Fund Financing Fund for Loan Guar.
1010 $ 1 $ 20
1310 N/A -0-
1350 N/A 24
1399 N/A (17)
2110 -0- N/A
2170 -0- N/A
2180 N/A (18)
2190 N/A (4)
3100 (1) N/A
3101 -0- N/A
3107 -0- N/A
3310 -0- -0-
5312 -0- -0-
5700 -0- N/A
5730 -0- -0-
6100 Adm Exp -0- N/A
6100 Sub-Def -0- N/A
6100 Funded Sub Re-Est -0- -0-
6790 Int Exp - LGL N/A -0-
6800 Sub Re-est-Cash Fl -0- -0-
6800 Sub Re-est-Int Rate -0- -0-
6800 Unfunded Sub Re-est -0- -0-
- 33 -
RELATIONSHIPS AMONG POST-
CLOSING ACCOUNT BALANCES—YEAR 2
The following relationships exist between the post-closing trial balances, in addition to
the general requirement that the sum of debit balances must equal the sum of credit
balances:
Program Fund
1. 4201 = 1010 [$1 = $1]
Financing Fund
1. 4201 = 1010 [$20 = $20]
2. 3310 must = $-0- [it does]
FINANCIAL STATEMENTS – YEAR 2
The following condensed financial statements are illustrated for Year 2:
• Statement of net cost
• Statement of changes in net position
• Statement of budgetary resources
• Statement of financing
• Balance sheet
Crosswalks from the trial balances are provided with the statements. All are pre-closing
figures unless indicated by a “B” (from the beginning trial balance) or an “E” (from the
post-closing trial balance). A “P” indicates that an account comes from the program fund;
an “F” that it comes from the Financing Fund for Loan Guarantees. Where the same
account number is used, line items would have to be distinguished by sub-accounts,
attributes, or some other means of coding.
- 34 -
DoD Loan Guarantee Program
Statement of Net Cost
For Fiscal Year 2
Expenses35
Re-Estimated Subsidy Expense – From Cash Flows $ (4) [6800P]
Interest Expense – Loan Guarantee Liability 1 [6790F]
Administrative Expenses 2 $ (1) [6100P]
Earned Revenue:
Interest Revenue – Treasury (1) [5312F]
Net Cost of Operations $ (2)
DoD Loan Guarantee Program
Statement of Changes in Net Position
For Fiscal Year 2
Crosswalk
Cumulative Results of Operations:
Cumulative Results of Operations October 1 $ (5) 3310P;B
Non-Budgetary Transfers-Out (4)
Appropriations Used for Goods, Services,
And Benefits 7 5700P
Net Cost of Operations 2 From SNC
Cumulative Results of Operations September 30 $ -0- Must = 3310P/E
Unexpended Appropriations
Unexpended Appropriations October 1 $3 3100P;B
Appropriations Received 5 3101P
Appropriations Used ( 7) 3107P
Unexpended Appropriations September 30 $1 Must = 3100P;E
35
FASAB Standards 2 and 18 require that subsidy expense must be broken into its components. This is
done on the face of the statement of net cost here. An alternative would be to combine the subsidy expense
into a single amount on the statement of net cost and break it out in a footnote to the financial statements.
- 35 -
DoD Loan Guarantee Program
Statement of Budgetary Resources
For Fiscal Year 2
[Program Fund] [Financing Fund]
RESOURCES BUDGETARY NON-BUDGETARY Crosswalk
Unobligated Balance Forward October 1 $ 1 $36 4450B
New Resources:
Appropriations 5 4115/4117
Offsetting Collections 9 4262/3,4271/3
TOTAL RESOURCES $ 6 $45
STATUS OF RESOURCES
Obligated $ 5 $25 48xx/49xxE-B
Unobligated – Available for New Obligations 1 20 4450
TOTAL STATUS OF RESOURCES $ 6 $45
RELATIONSHIP OF NET OBLIGATIONS
TO NET OUTLAYS
Gross Obligations $ 5 $25 Sec. 2
Less Offsetting Collections -0- (9) Sec. 1
Net Cash and Non-Cash Obligations 5 16
Decrease in Budgetary Accts. Pay. 1 (Note A) -0- 4901E-B
Decrease in Undeliv. Orders Without Advances 2 (Note A) -0- 4801E-B
NET OUTLAYS $ 8 $16
Components of Net Outlays:
Disbursements $ 8 $25 4902
Offsetting Collections -0- (9) 4262/3,4271/3
NET OUTLAYS $ 8 $16
____________
(A) The ending amount of budgetary accounts payable was $0; the beginning amount was $1. The ending amount of
undelivered orders without advances was $0; the beginning amount was $2.
- 36 -
DoD Loan Guarantee Program
Statement of Financing
For Fiscal Year 2
Crosswalk
Resources Financing Activities:
Net Obligations (from stmt. of bud. res.) $21 SOBR, Sec 3
Non-budgetary Transfer-out (4) $17 5730F
Items in Net Obligations Not
Funding Net Cost of Operations:
Collections of Subsidy 5 4271P
Collections of Loan Principal 1 4262F
Collections of Capitalized Loan Int. 2 4263F36
Obligations for Defaults (25) 4902F37
Oblig. for Subsidy Expensed in Year 1 (5) 6800P38
Decrease in Undelivered Orders 2 (20) 4801P(E-B)
Net Obligations Funding
Net Cost of Operations (3)
Items in Net Cost of Operations Not
Requiring or Using Current-Period Resources:
Interest Expense – Loan Guarantee Liab. 1 6790F
Net Cost of Operations $(2)
36
This would be identified as a reconciling item on the statement of financing via a combination of the
account number and the fund symbol identifying it as belonging to a loan guarantee financing fund.
37
There is no single account from which this number can be derived. Some sort of data element would need
to be captured with transaction 2-7 to specifically identify it.
38
This would be captured from the credit to 6800 Unfunded Subsidy Expense now Funded. There would
need to be a data element/attribute or sub-account with 6800 to identify that specific account.
- 37 -
DoD Loan Guarantee Program
Balance Sheet
At End of Fiscal Year 239
ASSETS Crosswalk
Fund Balance with Treasury $21 1010P/F
Defaulted Guaranteed Loans Receivable $24 1350F
Less Allowance for Subsidy (17) 7 1399F
Total Assets $28
LIABILITIES
Payable to Misc. Receipt Fund $ 4 2190F
Loan Guarantee Liability 23 $27 2180F
NET POSITION
Unexpended Appropriations 1 3100P;E
Cumulative Results of Operations -0- 1 3310P;E
TOTAL LIABILITIES AND NET POSITION $28
39
Note that the financing fund’s receivable from the program fund, and the program fund’s payable to the
financing fund are eliminated in the consolidation process and do not appear on the consolidated balance
sheet.
- 38 -
TRANSACTIONS—YEAR 3
Only transactions for disposing of the downward re-estimate accrued in the financing
fund at the end of Fiscal Year 2 are illustrated in Fiscal Year 3. No transactions are
illustrated for the program fund. In a real situation, administrative expenses would
continue to be incurred, and loan guarantees would continue to be made.
3-1. The financing fund requested an apportionment of its beginning unobligated
balance to pay the $5 downward re-estimate accrued at the end of Fiscal Year 2.40
No entry is required, because the unobligated balance is already present in account 4450.
3-2. OMB approved the apportionment request.
4450 Unapportioned Authority 4
4510 Apportionments 4
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A116 A116-001 4450 4510 4
3-3. The agency allotted the authority.
4510 Apportionments 4
4610 Allotments – Realized Resources 4
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
A120 A120-001 4510 4610 4
3-4. The money was transferred to the miscellaneous receipt fund (this should be
done as close to the beginning of Year 3 as possible).
4610 Allotments – Realized Resources 4
4700 Commitments 4
4700 Commitments 4
4801 Undelivered Orders Without Advances 4
4801 Undelivered Orders without Advances 4
4902 Delivered Orders – Paid41 4
40
Note that the Budget rules call for this to be an expenditure transfer of the financing fund, which requires
that it be obligated. Hence, an apportionment is necessary.
41
The business rule of establishing a payable is waived for this transaction, because a non-budgetary
payable was accrued in Year 1. Requiring an entry to account 4901 for the current transaction would
require a companion funded liability, such as 2110, to be recorded along with it to keep the budgetary and
proprietary accounts in synch. This complication is too cumbersome to implement.
- 39 -
2190 Subsidy Payable to Misc. Receipt Fund 4
1010 Fund Balance with Treasury 4
6800 Unfunded Subsidy Re-Estimate Expense Now Funded 442
6100 Funded Subsidy Re-Estimate Expense Previously Unfunded 4
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
B202 B202-001 4610 4700 4
B204 B204-003 4700 4801 4
B302 B302-025 4801 4901 4
B110 B110-005 4901 4902 2190 1010 4
PRE-CLOSING TRIAL BALANCES—YEAR 343
Budgetary Program Fund Financing Fund for Loan Guar.
4201 1 20
4450 (1) (16)
4902 -0- (4)
Proprietary Program Fund Financing Fund for Loan Guar.
1010 $ 1 $ 16
1350 N/A 24
1399 N/A (17)
2180 N/A (23)
2190 N/A -0-
3100 (1) N/A
3310 -0- -0-
RELATIONSHIPS AMONG PRE-
CLOSING ACCOUNT BALANCES—YEAR 3
The following relationships exist between the pre-closing trial balances, in addition to the
general requirement that the sum of debit balances must equal the sum of credit balances:
42
This entry is designed to equate financing sources from appropriations used with funded expenses. Note
that the $4 was recorded as a credit to 6800 in transaction 2-11. Combining this with transaction 3-4, the
net result is a negative funded expense of $4. Note that there would be no expense related to this reported
on the statement of net cost for Year 2, because the debit to 6800 and credit to 6100 cancel.
43
Accounts not represented have zero balances.
- 40 -
Program Fund
1. 4201 = 1010 [$ = $1]
Financing Fund
1. 4201 – 4902 = 1010 [$20 – $4 = $16]
2. 3310 must = $-0- [it does]
CLOSING ENTRIES—YEAR 3
Closing entries are set forth below.
FCB-3.1. To consolidate the budgetary cash accounts into 4201.
4902 Delivered Orders – Paid 4
4201 Total Actual Resources - Collected 4
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F214 F214-001 4902 4201 4
Financing Fund Proprietary
FCP-3.1 To close the expenses to cumulative results of operations.
6100 Funded Subsidy Re-Estimate Expense Previously Unfunded 4
3310 Cumulative Results Of Operations 4
6800 Unfunded Subsidy Re-Estimate Expense Now Funded 4
3310 Cumulative Results Of Operations 4
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F228 F228-063 6100 3310 4
F228 F228-032 3310 6800 4
POST-CLOSING TRIAL BALANCES—YEAR 3
Budgetary Program Fund Financing Fund for Loan Guar.
4201 1 16
4450 (1) (16)
- 41 -
Proprietary Program Fund Financing Fund for Loan Guar.
1010 $ 1 $ 16
1350 N/A 24
1399 N/A (17)
2180 N/A (23)
2190 N/A -0-
3100 (1) N/A
3101 -0- N/A
3107 -0- N/A
3310 -0- -0-
RELATIONSHIPS AMONG POST-
CLOSING ACCOUNT BALANCES—YEAR 3
The following relationships exist between the post-closing trial balances, in addition to
the general requirement that the sum of debit balances must equal the sum of credit
balances:
Program Fund
1. 4201 = 1010 [$1 = $1]
Financing Fund
1. 4201 = 1010 [$16 = $16]
2. 3310 must = $-0- [it does]
FINANCIAL STATEMENTS – YEAR 2
The following condensed financial statements are illustrated for Year 3, as applicable:
• Statement of net cost
• Statement of changes in net position
• Statement of budgetary resources
• Statement of financing
• Balance sheet
Crosswalks from the trial balances are provided with the statements. All are pre-closing
figures unless indicated by a “B” (from the beginning trial balance) or an “E” (from the
post-closing trial balance). A “P” indicates that an account comes from the program fund;
an “F” that it comes from the Financing Fund for Loan Guarantees. Where the same
account number is used, line items would have to be distinguished by sub-accounts,
attributes, or some other means of coding.
- 42 -
DoD Loan Guarantee Program
Statement of Net Cost
For Fiscal Year 3
There are no expenses or earned revenues to report.
DoD Loan Guarantee Program
Statement of Changes in Net Position
For Fiscal Year 3
There are no changes to report.
DoD Loan Guarantee Program
Statement of Budgetary Resources
For Fiscal Year 3
[Program and] [Financing Fund]
Misc. Receipt Fund]
RESOURCES BUDGETARY NON-BUDGETARY Crosswalk
Unobligated Balance Forward October 1 $ 1 $20 4450B
STATUS OF RESOURCES
Obligated $-0- $ 4 48xx/49xxE-B
Unobligated – Available for New Obligations 1 16 4450
TOTAL STATUS OF RESOURCES $ 1 $20
RELATIONSHIP OF NET OBLIGATIONS
TO NET OUTLAYS
Gross Obligations $ -0- $ 4 Sec. 2
Less Offsetting Collections -0- -0- Sec. 1
Net Cash and Non-Cash Obligations -0- 4
Net Non-Cash Obligations -0- -0- 4801/4901E-B
Net Outlays before Offsetting Receipts -0- 4
Offsetting Receipts Deposited to
Misc. Receipt Fund44 4 -0-
NET OUTLAYS AFTER
OFFSETTING RECEIPTS $-0- $ 4
Components of Net Outlays:
Disbursements $ -0- $ 4 4902
Offsetting Collections -0- -0-
Offsetting Receipts 4 -0- 4262/3,4271/3
NET OUTLAYS AFTER
OFFSETTING RECEIPTS $ (4) $ 4
44
Although the deposits were made by the financing fund, they are recognized as collections by the
miscellaneous receipt fund, which is a budgetary entity. Miscellaneous receipt funds are not reported with
the financial statements of the depositing agency, but OMB Circular 01-09 on form and content of agency
financial statements requires that the offsetting receipt be shown as illustrated. Hence, the $4 transfer from
the financing to the miscellaneous receipt fund here is shown as a miscellaneous receipt in the budgetary
column and as an obligation in the non-budgetary column.
- 43 -
DoD Loan Guarantee Program
Statement of Financing
For Fiscal Year 3
Crosswalk
Resources Financing Activities:
Net Oblig. After Offsetting Rec. $-0- SOBR, Sec 3
Items in Net Obligations Not
Funding Net Cost of Operations:
Offsetting Receipt for Downward Subs. Re-Est. $4 4902F45
Oblig. for Subsidy Expensed in Year 2 (4) -0- 6800F46
Net Cost of Operations $-0-
DoD Loan Guarantee Program
Balance Sheet
At End of Fiscal Year 3
ASSETS Crosswalk
Fund Balance with Treasury $17 1010P/F
Defaulted Guaranteed Loans Receivable $24 1350F
Less Allowance for Subsidy (17) 7 1399
Total Assets $24
LIABILITIES
Loan Guarantee Liability $23 2180F
NET POSITION
Unexpended Appropriations 1 3100P;E
Cumulative Results of Operations -0- 1 3310P;E
TOTAL LIABILITIES AND NET POSITION $24
45
Note that the obligation in the financing fund is the same amount as the offsetting receipt in the
miscellaneous receipt fund. See also the following note.
46
This line would be fed via the debit to account 6800 Unfunded Subsidy Expense Now Funded. There
would need to be a data element/attribute or subaccount to specifically identify the item.
- 44 -
APPENDIX: MEMORANDUM ACCOUNTS
FOR CAPTURING ADDITIONAL INFORMATION
INTRODUCTION
This appendix discusses the following categories of information in addition to the
information in the preceding sections of this case, which need to be reported for loan
guarantee programs:
• Loan guarantee levels and their status;
• Loan disbursements made by third party-lenders and their status; and
• Reconciliation of the beginning and ending balances of the loan guarantee
liability.
LOAN GUARANTEE LEVELS
In addition to preparing the CFO-Act financial statements, credit agencies are also
required to obtain an apportionment and allotment of their loan guarantee levels. Unlike
direct loans, loan guarantees do not result in outflows of resources when the guarantees
are made, and thus can’t be controlled by apportioning and allotting resources.
Accordingly, the actual levels of loans, which can be guaranteed—the loan guarantee
authority—, must be apportioned and allotted. This information is included on the SF-
132, “Request for Apportionment,” for loan guarantee programs, and the figures are
based on 100 percent of the loans to be guaranteed, even if the terms of the guarantee
provide for less than that. The reporting does not include any interest guaranteed,
although that information would be disclosed in the financial statements and notes.
The SGL provides non-mandatory memorandum accounts for use with the financing fund
in controlling the making of loan guarantees to avoid making more guarantees in any
given time period than apportioned by OMB and allotted by the credit program entity.
These accounts are:
GUARANTEED LOAN LEVEL
MEMORANDUM ACCOUNTS
8010 Guaranteed Loan Level (GLL)
8015 Guaranteed Loan Level - Unapportioned
8020 Guaranteed Loan Level - Apportioned
8025 Reserved for Agency Use [e.g. - Allotted]
8030 Reserved for Agency Use [e.g. GLL – Committed]
8035 Reserved for Agency Use [e.g. GLL - Obligated]
8040 Guaranteed Loan Level - Used Authority
8045 Guaranteed Loan Level - Unused Authority
- 45 -
None of the accounts are reported to Treasury or OMB, and the “reserved for agency use”
accounts have balances that would normally only be used to provide information within
the credit agency for management purposes. The other accounts capture information that
is reported to OMB on the SF-132. This appendix discusses only those other accounts.
Agencies can use other methods of capturing the information if they wish.
The basic accounting equation provided by the self-balancing accounts is shown in the
table below.
ACCOUNTING EQUATION
GUARANTEED LOAN LEVEL MEMORANDUM ACCOUNTS
GLL (Dr.) = Status of GLL (Cr.)
8010 GLL 8015 GLL - Unapportioned
8020 GLL - Apportioned
8040 GLL - Used Authority
8045 GLL - Unused Authority (Closing account for 8015 & 8020)
In the illustrative case study, these accounts would be used during Year 1 only, in
conjunction with the entries set forth below.
A1-1. The financing fund for the loan guarantee program anticipated receiving a
$35 subsidy collection anticipated from the program fund and $1 of interest from
Treasury on uninvested balances in the fund. Because no defaults or other
transactions requiring an apportionment were expected, no apportionment was
requested.
The $35 subsidy supported a loan guarantee level of $100, as the subsidy rate was 35
percent ($35/.35 = $100). Accordingly, the entry to be made is:
8010 Guaranteed Loan Level 100
8015 Guaranteed Loan Level – Unapportioned 100
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
E102 E102-001 8010 8015 100
This establishes the loan level for the year and shows its initial status as unapportioned.
While no apportionment of resources will be requested for the financing fund, an
apportionment of the loan guarantee level must be requested in order to provide
guarantees.
- 46 -
A1-2. OMB apportioned all requested amounts.
8015 Guaranteed Loan Level – Unapportioned 100
8020 GLL – Apportioned 100
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
E104 E104-001 8015 8020 100
This changes the status of the loan guarantee level from unapportioned to apportioned.
A1-3. The entity made a firm commitment to make a $100 loan guarantee to an
applicant after the applicant satisfied stated criteria. The subsidy rate was 35%, and
the full loan was guaranteed.
8020 GLL – Apportioned 100
8040 GLL – Used Authority 100
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
E106 E106-001 8020 8040 100
A1-4 Closing entries. Because all authority was used, there are no closing entries
required. A new set of memo accounts would be created for next year’s cohort, and the
accounts just posted would remain with this year’s cohort. Had there been some unused
authority, the closing entry would have been:
8015 GLL – Unapportioned
8020 GLL – Apportioned
8045 GLL – Unused Authority
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit
Code Code
E104 E104-001 8015 8020
F236 F236-001 8020 8045
Flow of entries would be: 8015 debit and 8020 credit; then 8020 debit and 8045 credit.
A1-5 If the unused loan level could still be used next year, and OMB apportioned it,
the entry to record the apportionment in the next year would be
8045 GLL – Unused Authority
8020 GLL – Apportioned
- 47 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit
Code Code
F236 F236-002 8045 8020
Because the memo accounts are not mandatory, variations of the closing entries and the
apportionment entries for the next year would be possible. What was just illustrated is
only one way that the accounts could be made to work.
LENDER DISBURSEMENT/
BORROWER PAYMENT STATUS
FASAB Standard 2 and OMB Bulletin 01-09 require that guaranteed loans outstanding,
and that new loans guaranteed during the year, be shown in notes to the financial
statements. The SGL provides the following non-mandatory accounts to do this:
MEMORANDUM ACCOUNTS FOR
LOANS DISBURSED AND STATUS
8050 Guaranteed Loan Principal Outstanding [at the beginning of the year]
8053 Guaranteed Loan New Disbursements by Lender [during the year] (closed into 8070)
8056 Reserved for Agency Use
8059 Reserved for Agency Use
8062 Reserved for Agency Use
8065 Guaranteed Loan Collections, Defaults, and Adjustments (closed into 8050)
8068 Reserved for Agency use
8070 Guaranteed Loan Cumulative Disbursements by Lenders
With direct loan programs, the government disburses and collects the loans. With loan
guarantee programs, third-party (private) lenders do the disbursing and collecting up to
the time of default. Lenders are required to report information on disbursements,
collections, and defaults to agencies, which capture them in the accounts shown.
- 48 -
The accounting equation satisfied by the accounts is:
ACCOUNTING EQUATION
LOANS DISBURSED AND STATUS
Disbursements (Dr.*) = Status of Disbursements (Cr.*)
8070 Guaranteed Loan Cumu- 8050 Guaranteed Loan Principal
lative Disbursements by Lenders Outstanding
8053 Guaranteed Loan New 8065 Guaranteed Loan Collections,
Disbursements by Lenders Defaults, and Adjustments
*Illustrated with balances opposite those provided in SGL.47
The accounting equation shown can be described by noting that the total disbursements
made to borrowers of guaranteed loans by the third-party lenders involved as of the
beginning of the year, plus new loans made during the year, represent the amount of
loans to account for. The status of the loans is either that they have been paid by the
borrowers (or have defaulted or otherwise been adjusted in some way), or they are still
outstanding. If credit agencies wanted to report or gather information in more detail than
shown in the chart, the accounts reserved for agency use could be employed. Such
information might be breaking out the status by defaults and by types of adjustment. The
case will use only the basic accounts in the chart above. A set of these accounts should be
maintained for each cohort.
47
FMD believes that the balances assigned the accounts in the SGL tend to cause confusion, in that in other
situations, such as the budgetary accounts, the items for which a status is shown (resources, in the case of
the budgetary accounts) have a debit balance, and the status accounts have a credit balance. This is also true
of the memorandum accounts for controlling the loan guarantee level. The accounts related to third-party
lender disbursements have opposite balances from what one would expect from the other account sets, and
accordingly, the case illustrates them with the balances one would glean from the theory underlying those
other account sets. This will be proposed to the USSGL Board as a modification to the USSGL.
- 49 -
Use of the accounts in Year 1. The only transaction in the body of the case that would use
these accounts is transaction 1-6:
A1-6. The applicant met the required criteria and received the guaranteed loan for
$100 from a third-party lender.
Because this is a new loan made during Year 1, the entry would be:
8053 Guaranteed Loan New Disbursements by Lenders 100
8050 Guaranteed Loan Principal Outstanding 100
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
E108 E108-002 8053 8050 100
These accounts tell the reader that $100 in new guaranteed loans were made by third-
party lenders, and that the full $100 of principal is still outstanding.
A1-7. The next transaction using the accounts would be based on a reporting of
amounts of principal collected (note that there is no requirement to report interest
the borrowers pay to their lenders), which lenders must provide to the credit
program agency. The body of the case does not provide that information, but
suppose that, at year-end, it was reported that $10 had been paid on principal. The
entry to record this would be:
8050 Guaranteed Loan Principal Outstanding 10
8065 Guar. Loan Collections, Defaults, and Adjustments 10
At this point, 8053’s balance of $100 tells the reader that $100 of new guaranteed loans
were disbursed during the year. 8065’s $10 balance tells the reader that $10 of that was
collected, defaulted, or otherwise adjusted. 8050’s balance of $90 tells the reader that $90
of the loans is still outstanding with the third-party lender.
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
E110 E110-001
Reverse Reverse 8050 8065 10
A1-8 Closing entry. At the beginning of the next year, loans that were made in the
preceding year are now part of the cumulative loans made in prior years.
Accordingly, the following closing entry is required:
8070 Guaranteed Loan Cumulative Disbursements by Lenders 100
8053 Guaranteed Loan New Disbursements by Lenders 100
- 50 -
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
F238 F238-001
Reverse Reverse 8070 8053 100
Use of the accounts in Year 2. There is only one transaction illustrated for Year 2 that
would require appending of the memorandum accounts for loan disbursement status:
A2-1. The financing fund approved a default claim for $25 and paid it, assuming
$25 in defaulted guaranteed loans for direct collection with a present value of $10.
Here, the default would be recorded in the memorandum accounts in the same manner as
though it were a collection (separate accounts could be established to accumulate
defaults, if desired). Assuming that the $25 was only for principal (remembering that
only the status of principal is required to be reported), the entry would be:
8050 Guaranteed Loan Principal Outstanding 25
8065 Guar. Loan Collections, Defaults, and Adjustments 25
USSGL DoD
Proprietary Budgetary Proprietary Proprietary
Trans Trans
Debit Credit Debit Credit Amount
Code Code
E110 E110-001
Reverse Reverse 8050 8065 25
At this point, 8050’s balance of $100 tells the reader that $100 of guaranteed loans
disbursed in prior years were disbursed. 8065’s $35 balance tells the reader that $35 of
that was collected, defaulted, or otherwise adjusted. 8050’s balance of $65 tells the reader
that $65 of principal on the loans is still outstanding with the third-party lenders.
Note that from this point forward, payments on the defaulted guaranteed loans, which
have been assumed by the credit program entity for direct collection, no longer are
accounted for via the memorandum accounts. Once the entry shown with transaction 2-7
is made, no further recording in the memorandum accounts is made for those loans.
At the end of Year 2, and in subsequent years, payments, defaults, and adjustments on
guaranteed loans which have not defaulted should continue to be made, and the closing
entry illustrated for Year 1 should be made to the extent applicable.
RECONCILIATION OF BEGINNING
AND ENDING LOAN GUARANTEE BALANCES
FASAB Standard 18 requires that for loan guarantee programs under credit reform (as
opposed to pre-credit reform which the standard exempts), the credit entity must include
a reconciliation of the beginning and ending balances of the loan guarantee liability as
part of the notes to its financial statements.48 The SGL does not provide accounts for
48
It may be helpful to note here that this does not apply to the allowance for subsidy related to defaulted
guaranteed loan assets under credit reform. There is a requirement to reconcile the allowance for subsidy
related to loan assets in direct loan programs under credit reform.
- 51 -
directly accumulating the data for the reconciliation, though some information is captured
in the budgetary or proprietary accounts in the course of recording transactions.
Condensed reconciliations for the case agency for Years 1 and 2 (there were no
transactions affecting the balance of the loan guarantee liability in Year 3) are presented
below, with transaction numbers involved and crosswalks to budgetary and proprietary
accounts available to provide the information. In the crosswalks, B = beginning balance,
E = ending (post-closing) balance, P = Program Fund, F = Financing Fund, and D
indicates that some sort of data element, attribute, or sub-account would be needed along
with the account shown. N/A means that a transaction number is not applicable to the line
item involved. Unless accounts are shown with a B or an E, the pre-closing balance of the
account is intended.
Transaction
Year 1 Number Crosswalk
Beginning Balance $-0- N/A 2180B (F)
Basic Subsidy for New Loans 35 1-6 6100 (D) (P)
Interest Accumulation Factor 1 1-10 6790 (D)49 (F)
Upward Re-estimate 5 2-11 6800 (D) (P)50
Ending Balance $41 N/A Must = 2180E
Year 2
Beginning Balance $41 N/A 2180B (F)
Defaults (25) 2-7 Nothing available
Loans Assumed for Direct Coll. 10 2-7 Nothing available
Interest Accumulation Factor 2 2-10 6790 (D) (F)
Downward Re-estimate (4) 2-11 Nothing available 51
Ending Balance $41 N/A Must = 2180E
Where “nothing available” is indicated for a crosswalk, the reporting entity must provide
for some means to capture the information if the required credit program footnote is to be
automated or if manual research of the transactions is to be avoided.
* * * This is the end of the loan guarantee case. * * *
49
A data element would be needed because 6790, though used only for the interest accumulation factor in
the case, is for “other interest expense,” and could possibly contain items other than the accumulation
factor.
50
This crosswalk will work for Year 1 only. This is because there are no defaulted guaranteed loan asset
accounts, and hence, the re-estimate applies only to the loan guarantee liability. It would not apply to any
re-estimate that applied partly to the loan guarantee liability and partly to defaulted guaranteed loan assets.
51
Although the 6800 financing fund account for the Year 2 re-estimate is available, its balance of $4 is a
combination of a downward re-estimate of $5 for the loan guarantee liability and an upward re-estimate of
$1 for the defaulted guaranteed loan assets. See also the preceding note.
- 52 -